Richmond Fed's Lacker Warns About Inflation Risks for the 47,000th Time, Is Still Ignored

Perhaps I have too much time on my hands but I've pictured a frazzled Jeff Lacker preaching to the FOMC about interest rates for the last year and a half, shuffling back and forth before the big shiny conference table warning about inflation, default, and fire and brimstone while Janet Yellen throws spitballs at him and Eric Rosengren slaps a "kick me" sign on his back. He's serious but still it doesn't look like anyone is listening.

U.S. policy-makers must not wait too long to raise interest rates and must not hesitate even if there is still tension in financial markets, a top Federal Reserve official said on Tuesday.

Foreseeing how the European debt crisis will affect of U.S. monetary policy is difficult, as it will depend on what, if any, impact it has on U.S. growth, Richmond Federal Reserve Bank President Jeffrey Lacker told reporters.

"We need to be wary of the temptation to hesitate as long as there is some identifiable area of financial fragility in the world," Lacker said after delivering a speech here.

Global policymakers this weekend unveiled an emergency rescue package worth around $1 trillion aimed at preventing Greece's debt crisis spreading through the euro zone. Lacker called the package "large and impressive" but cautioned Europe still has to address fundamental fiscal imbalances.

The U.S. recovery is gradually picking up steam and employment is on a "path to steady growth", Lacker said.

With this backdrop, the U.S. inflation rate is unlikely to stay at recent low levels of below 1 percent, he said.

"I believe inflation is unlikely to stay that low," Lacker said. "In fact, the public apparently expects higher inflation in the future, which suggests that policymakers will need to avoid waiting too long to raise rates," he said.

See, that would be about the time Bill Dudley starts doing the handpuppet mouth behind Lacker's back and the entire Dirty Fed Funny Money team cackles like a bunch of high school bullies stuffing a nerd into a locker. Poor thing, no one cares.